Indonesia and Singapore Central Banks Officially Implement Local-Currency Transaction Framework

Bank Indonesia and Singapore’s Monetary Authority have formally launched a framework allowing businesses to settle bilateral transactions in rupiah and Singapore dollars.

The announcement follows a memorandum of understanding signed in August 2022 and operating guidelines agreed by the two central banks in April 2026. Indonesia has set out implementation rules through a 2026 regulation covering bilateral transactions between Indonesia and Singapore through banks.

Designated Appointed Cross Currency Dealer banks can facilitate current-account transactions, direct investment and cross-border payments using local currencies. Nine Indonesian banks have been designated, including Bank Central Asia, CIMB Niaga, DBS Indonesia, Bank Mandiri, Maybank Indonesia, Bank Negara Indonesia, OCBC NISP, Bank Pembangunan Daerah Jawa Timur and UOB Indonesia.

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This LCT framework will support bilateral trade while strengthening ASEAN financial integration through wider use of local currencies in intra-ASEAN transactions.

Singapore has designated three banks: DBS Bank, Oversea-Chinese Banking Corporation and United Overseas Bank.

The framework includes direct rupiah-to-Singapore-dollar quotations and relaxed rules intended to encourage local-currency use. Ramdan Denny Prakoso, head of Bank Indonesia’s communications department, said the arrangement would support bilateral trade and strengthen ASEAN financial integration.

Bank Indonesia said the system should give businesses and other users more flexibility, while reducing currency risk and transaction costs. The central bank has promoted local-currency transactions for about eight years as a way to reduce reliance on the US dollar, and said their use has grown more than 70-fold over that period.

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This is expected to provide greater flexibility for businesses and other users in conducting transactions using local currencies, while reducing exchange-rate risks and transaction costs.